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Search for income continues, says Skandia

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Skandia’s net sales figures for the month of May show the search for income continues to be a key investment driver. Income generating funds continue to dominate the top 10 selling fund list, and the Towers Watson UK Fixed Interest sector has jumped backed into the top spot.

The fixed interest sector has recovered from its low point earlier this year and now accounts for nearly a quarter of all net sales onto the Skandia platform. This is closely followed by the multi-asset sector, which has slipped to second place with 23 per cent of net sales. Global specialist and UK equity sectors have remained fairly constant and continue to be key investment sectors.
 
In international equities, North American equities dominate, whilst emerging markets have moved to a net outflow position. This reflects the relative outperformance of US equity markets relative to emerging markets over the month by nearly five per cent, and nearly 20 per cent year to date.
 
The rise in the fixed interest sector has been driven by particularly strong sales of two sterling strategic bond funds: namely Fidelity Strategic Bond and Old Mutual Monthly Income, with the Fidelity Strategic Bond fund being the top selling fund in May.
 
HSBC American Index as the third bestselling fund is notable given the recent performance of US equities, but unusual for a passive fund to feature in the top selling list. The inclusion of Henderson UK Property Trust is the first time there has been a property fund in the top 10 this year, and could signal the willingness of investors to move into other assets as a way of receiving income.
 
James Millard (pictured), director of investments at Skandia, says: “In the current low bond yield environment it is becoming increasingly more complex allocating to fixed income. Strategic bond funds have benefited from this, with investors preferring to use skilled managers who have the flexibility to allocate across the fixed income universe.
 
“The emergence of property amongst the top selling funds alongside many other income oriented funds also reflects the continued search for sources of income and diversification away from traditional fixed income strategies."

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